The head of the Bank of Israel project to launch the digital shekel, Yoava Soffer, as part of the program to launch the digital currency of the Central Bank, announced the continuation of the study of cryptocurrencies.
Yoav Soffer, responsible for the launch of the state digital currency of the Bank of Israel, said that Israel is expanding its research into digital currencies of the Central Bank. As part of this initiative, the regulator’s unit responsible for researching the possibilities of the state digital currency asks stakeholders, including technology companies at home and abroad, as well as other central banks, the risks and benefits of implementing the digital shekel.
Soffer stressed that the deployment of the Israeli Central Bank’s digital currency is still hypothetical. Many issues have not been resolved, from the value of the digital shekel to its impact on the banking system. He said that after conducting experiments using Ethereum, the central bank of Israel plans further technical studies in 2022 to assess the viability of various types of digital currencies.
“Now we are increasing the resources allocated to the digital shekel project, both in terms of finances and people,” he said. “The digital shekel has great potential to increase competition and innovation in the payments industry.”
According to Soffer, over the past year, Israeli politicians have been talking to a wide range of businessmen, financiers, legislators and regulators about the launch of the central bank’s digital currency. While most of the responses were “favorable”, some raised concerns about the bank’s proposal that digital shekel transactions could be free.
The Bank of Israel resumed research on a state-owned digital currency in late 2020 after shelving an initial project in 2018. At the time, a group set up at the central bank recommended not issuing a digital version of the shekel. According to a May 2021 report from the Bank of Israel, a token like the digital shekel could “reduce the risk to financial stability and monetary sovereignty” if the public accepts private coins or digital currencies issued by other central banks. The program will look at the impact that the digital shekel could have on the Israeli economy, payment systems, banks and credit markets. In June, the Deputy Governor of the Bank of Israel, Andrew Abir, announced that the regulator had already begun a program to test the state digital currency.
